Thursday, January 17, 2013

Retail stores that scan your license when returning an item are spying on consumers.

Roseville, CA- When the Michael’s store clerk required Kim Bushing’s driver’s license to return some craft supplies, she pushed back.

“I told her I wasn’t comfortable with it,” she recalled.

Bushing paid cash the day before and had her receipt. She says they told her without swiping her license, they wouldn’t process her return. She reluctantly handed over her identification, but says the Michael’s manager could not explain why they wanted it or the personal info they were collecting.

“I don’t know how many people now have access to my information.”

CBS13 told you last month how more stores are tracking returns hoping to weed out fraud which the industry claims is a $17 billion problem annually. In some cases, returnaholics are being banned from bringing stuff back. Bushing wanted to know exactly what they collect, when they swipe your driver’s license.

We got answers learning from the Department of Motor Vehicles everything on the front of your driver’s license is accessible through the magnetic strip or bar code including your name, address, birth date, hair and color and even your height and weight. Legally stores can collect the information and keep it for as long as they want if it’s for “fraud prevention”.

“To say you’re using that information or taking that information to prevent fraud, you can use that argument for just about anything,” said Democratic Senator Jerry Hill of San Mateo.

Senator Hill has investigated the issue and says he hasn’t found evidence of any abuses within the retail industry. He’d have to see an abuse to know how to come up with a law to stop it. In the meantime, he thinks stores should have to warn you at the register that you may have to hand over your identification card if you bring something back.

“If you don’t want to purchase from that retailer, then you can go someplace else to do it,” he said.

Bushing says she’ll think twice before going to Michael’s. The store issued CBS13 this statement.

“Michaels’ return policy is in compliance with California law and is posted both in our stores and on our website at The policy states that a valid photo ID is required to complete a return and that information will be recorded. The information is recorded to prevent fraud and is not retained for marketing purposes.”

According to the National Retail Federation, 62 percent of retailers have ID requirements. Among those who have similar policies for returns are The Finish Line, Home Depot, Target and more.

A company called The Retail Equation which tracks returns for 20-thousand companies also says it doesn’t share the info it collects for fraud prevention purposes. 

The Retail Equations FAQ section proves they are tracking consumers:

"What is Verify Return Authorization?
TRE’s Verify Return Authorization System (the current version is called Verify-2™) is designed to identify the 1 percent of consumers whose behaviors mimic return fraud or abuse —a $14.3 billion to 18.4 billion per year problem in the United States.

As part of the Verify-2 service, TRE is contracted by retailers to gather their transaction information, store it securely, and analyze the data to develop and follow return policies for those retailers. TRE works as both application service provider and call center for each retailer.

How Does the System Work?
When a consumer wants to make a return, a retailer will scan the original sales transaction receipt and/or swipe the individual’s driver’s license or government-issued ID card to make an identification of the person and his/her unique return behavior. As customers return merchandise, the system compares variables such as return frequency, dollar amounts and/or time against a set of prescribed rules that form that particular retailer’s return policy.

Verify-2 enables retailers to rely on objective, verifiable data to determine whether a return is valid rather than relying on subjective observations and guesswork by sales clerks. This objectivity ensures that only those with highly suspect return-and-exchange behavior are affected. The vast majority — approximately 99 percent — of returns are accepted.

Returns that break the retailer’s basic return policy, such as a return without a receipt, a return after the allowed return period, or multiple returns beyond the quantity of returns allowed by the retailer within a given period. Second, returns that make your overall return behavior indicate return fraud or abuse.

What Information Does Verify Return Authorization Retrieve From Consumers’ ID?
Verify-2 captures several pieces of information from IDs to ensure accurate consumer identification, and the information captured varies from state to state. Typically, this includes identification number, name, address, date of birth and expiration date.

Are you a consumer who was warned or denied a return or exchange by The Retail Equation?

If so, and you would like a copy of your return activity report from The Retail Equation, please send an email to:

In order to ensure your privacy, please include in your message to The Retail Equation your name and a phone number where The Retail Equation can reach you. When a representative from The Retail Equation calls we will ask for your return transaction ID number and the last four digits of your ID number."

More retailers swiping driver's licenses for returns.

Las Vegas, NV - More and more retail stores are swiping driver's licenses for returns, to prevent theft.

Michaels is one of those stores. It's website clearly states, you must provide a valid license or U.S. passport for any return, no matter how small.

But some customers are complaining, saying they don't want stores to have their license number, birth date and address.

A class action lawsuit just filed in federal court in West Palm Beach is demanding that Best Buy stop this very same practice.

At least one California congressman wants the policy outlawed.

Michaels and Best Buy insist driver's license data is safe and not sold, and kept only for internal fraud prevention. They say if you don't want to give them that information, then don't plan on returning anything you buy at these stores.

You may have noticed other stores swipe driver's licenses for "controlled" items. Target stores now swipe licenses if you buy canned compressed air, cold medicine, Nicorette gum and wine.

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